Objectives: There were two objectives: (1) to support the policy reform in the transport sector and restructure its institutions to operate in a market economy; and (2) to repair and maintain the most critical transport infrastructure links to remove bottlenecks. Components: There were two components, the institution building component and the investment component. The former included consultant services for: (a) preparing sector policy reforms; (b) technical assistance for the formulation of technical and legal frameworks to the restructuring, commercialization and privatization of sector entities; (c) managerial assistance for private and public transport enterprises; and (d) a training program to update sector technical staff. The investment component consisted of; (a) a road maintenance program, including selected equipment and spares for road maintenance; and (b) for the railways, bridge repairs, track materials, spares for locomotives, and communications and signaling equipment. Costs and financing: The project costs were US$30.35 million (US$20 million at appraisal) for which a credit of SDR8.1 million (US$11.15 equivalent) was approved in FY96. The cost increase was occasioned by increased cofinancing mostly for consultant services and training. The project was closed fully disbursed in December 1998 as planned.

3. Achievement of Relevant Objectives:

The objectives were achieved. legal, regulatory and technical frameworks for restructuring, commercializing and privatizing transport administrations and services (ports, railways, highways, road transport, inspection of vehicles) were prepared and adopted. Change management is either in progress or proposed. The Ministry of Transport was reconstituted and reorganized and is presently undergoing change management under a LIL credit. Presidential decree on transport policy was issued. A large number of professionals at various levels were trained and a training unit was established to provide training for transport professionals in the region for a fee. The investment component was fully achieved.

4. Significant Outcomes/Impacts:

The significant achievement was the total turnaround of the sector organization and management. The successful completion of the investment component suggests that this turnaround has been set on a successful course.

There are no significant shortcomings. The project fell short of its targets in restructuring ports and railways, adjusting tariffs for full cost recovery, and employing planned management systems. However, normally it takes more than one operation or more than three years to accomplish such targets.

6. Ratings:

ICR

OED Review

Reason for Disagreement/Comments

Outcome:

Highly Satisfactory

Highly Satisfactory

There may be a reason to doubt this rating on the grounds that the target indicators for port and railway restructuring were both 50% achieved, the pavement management system was not taken into use, user charges were not fully adjusted, and competitive bidding was not fully employed. But these are things that can rarely be achieved in three years so the stated objectives should not be used blindly as the only criterion for rating.

Institutional Dev.:

Substantial

Substantial

Sustainability:

Likely

Likely

Bank Performance:

Highly Satisfactory

Highly Satisfactory

Borrower Perf.:

Satisfactory

Satisfactory

Quality of ICR:

Satisfactory

7. Lessons of Broad Applicablity:

There is one broad lesson: Coordination among agencies implementing IDA projects would result in increased efficiency and benefit everyone. Other lessons are specific to the situation in Georgia.

8. Audit Recommended? Yes

Why?The Region is requesting it. The project does have a success story in institutional development. Large changes were approved quickly. The reasons for the apparent success are worth examination and dissemination.

9. Comments on Quality of ICR:

The ICR is satisfactory, except that the Future Operation focuses on future credits and loans rather than the sustained operation of this project and preservation of its accomplishments. The participatory preparation of the ICR is a positive innovation.